Krispy Kreme Q2 2026 Earnings Call Transcript

Krispy Kreme (NASDAQ: DNUT ) released second-quarter financial results and hosted an earnings call on Thursday. Read the complete transcript below. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

S. and international markets. Adjusted EBITDA margin increased by 340 basis points. S.

growth. Refranchising efforts have increased franchisee sales to 42% of system-wide sales. Krispy Kreme is expanding its international franchise markets and opened 59 new shops, mainly driven by franchisees in Japan, Brazil, South Korea, and the Middle East. , the company is leveraging existing manufacturing capacity to expand fresh delivery and improve margins through cost reduction and logistics outsourcing.

Net revenue in Q2 was $331 million, down 13% due to refranchising, while adjusted EBITDA grew 43%, reflecting productivity initiatives and cost controls. 35 billion and adjusted EBITDA of $140 to $150 million. Krispy Kreme is focusing on expanding its digital channels and enhancing partnerships with key retailers like Walmart and Target to increase fresh delivery sales. Full Transcript Paige, Operator Hello everyone, and thank you for standing by.

My name is Paige, and I will be your conference operator today. At this time, I would like to welcome everyone to the Krispy Kreme second quarter 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the company's prepared remarks, they will host a question-and-answer session.

If you would like to ask a question, press star one to raise your hand. I would now like to turn the call over to Steve West, Krispy Kreme Vice President of Investor Relations. Steve, please. Steve West, Vice President of Investor Relations Good morning everyone, and welcome to Krispy Kreme's second quarter 2026 earnings call.

Joining me are President and Chief Executive Officer Josh Charlesworth and Chief Financial Officer Rafael Duvivier. com. This call will also be available on our website and contains forward-looking statements. Forward-looking statements, including those of expectations, future events, or financial performance, are based on current expectations and are subject to risks and uncertainties.

Actual events or results could differ materially from those forward-looking statements due to factors described in the cautionary statements in our earnings release, annual report on Form 10-K filed with the SEC, and in other SEC filings we make from time to time. We assume no obligation to update any forward-looking statement, except as may be required by law. Additionally, we will reference certain non-GAAP financial measures. Information about these non-GAAP measures and reconciliations to the closest comparable GAAP measures is available in our earnings release.

Any reference to percentage growth when discussing second quarter results is a comparison to the second quarter of 2025 unless otherwise indicated. I will now turn the call over to Josh. Josh Charlesworth, President and CEO Thank you, Steve, and good morning everyone. Second quarter highlighted continued significant progress on our turnaround to strengthen the balance sheet, reduce leverage, and drive sustainable profitable growth.

Our year-to-date results demonstrate the success of the actions we are taking to grow the business and improve profitability. We remain confident in our ability to deliver our 2026 financial targets and are maintaining our previously issued guidance. Krispy Kreme remains a compelling global growth story supported by increasing consumer demand for our iconic fresh doughnuts. S.

expansion and capital-light international franchise growth. S. 6%, excluding the impact of the now-ended McDonald's USA partnership from last year. Overall, our goal remains to deliver system-wide sales of more than $2 billion in 2026.

Adjusted EBITDA margin significantly increased by 340 basis points as our focus on optimizing operations and logistics, along with driving more profitable sales per door in fresh delivery, is translating into stronger financial performance. S. growth. Our first pillar, refranchising, enables us to drive more profitable system-wide sales growth while accelerating new shop development through a capital-light model.

, both of which contributed to a reduction in net debt. Last year, approximately 25% of system-wide sales were generated by franchisees. Today, franchisees account for 42% of system-wide sales. Through additional refranchising efforts, our goal remains to reach approximately 50% of system-wide sales generated by franchisees beginning next year.

, to maximize value and position our brand for long-term growth. The second pillar of our turnaround is improving returns on capital across the business. We are significantly reducing capital intensity and improving our utilization of existing assets while our franchisees invest to support brand growth. As a result, we reduced our capex in the first half of the year by 70% compared to last year, which will contribute to achieving positive free cash flow in 2026.

We are pleased to have entered into agreements for three new international franchise markets this year, including the Netherlands, Estonia, and Mauritius, achieving our goal of three to four new markets in 2026. The continued strength of the Krispy Kreme brand is reflected in the interest we see from prospective franchise partners around the world, and we remain focused on pursuing additional opportunities to expand our global footprint through our capital-light franchise model. Year to date we have opened 59 new shops, driven by growth in Japan, Brazil, South Korea, and the Middle East.

All but two of these shops were opened by franchisees, and we remain on track to achieve our goal of opening at least 100 shops in 2026. S. growth by leveraging existing manufacturing capacity to expand fresh delivery. Our current network utilization is only about 25%, demonstrating the opportunity to expand to more locations without incremental capacity investment.

Walmart and Target, along with other strategic partners, are still significantly under-penetrated, and we can support additional growth through the same facilities that currently deliver to more than 7,600 doors nationwide. The third pillar of our turnaround is expanding margins. S. segment.

, we are making donuts more efficiently to enhance production planning, labor optimization, and streamlined hub operations, all leading to a meaningful reduction in labor spend. We continue to increase delivery efficiency through improved route management, demand planning, and the optimization of production and delivery schedules. S. logistics, we have greater cost predictability and reduced operational risk, enabling our teams to focus on what they do best: making fresh doughnuts.

After completing a successful test of a new AI-enabled platform for fresh delivery demand planning, we are now rolling it out across our company network. Based on the preliminary results, we expect this advanced technology solution will reduce out-of-stocks on the shelf while also minimizing returns. S. across our donut shops, digital channels, and fresh delivery partners.

S. The strength of our donut shops has been driven by our recently expanded core menu, led by our iconic Original Glazed donut. Supported by five seasonal donut collections each year and a steady cadence of innovative limited-time offerings, each plays a key role, but it's the combination that makes them so successful. Our core menu provides consistency and value, our seasonal collections deliver new flavors and variety, and our LTOs create excitement and cultural relevance.

Together they keep the brand fresh and engaging for consumers, stimulate curiosity, and drive sustained demand. We further support demand through targeted marketing and promotional programs that reinforce value and encourage larger purchases. Promotions such as our discounted second dozen offer provide value for consumers while driving doughnut sales and growth in average ticket size. S.

retail sales. This is driven by improvements in our proprietary digital platforms, including easier payment options and the growth of our loyalty program. , who visit typically 30% more frequently than non-loyalty members. In fresh delivery, we know that when our doughnuts are available in the right places and in the right quantities with strategic partners, we can generate higher average weekly sales and profitability.

During the second quarter, we added more than 200 doors with strategic partners such as Walmart, Target, Kroger, and Sam's Club. A key component of our continued success in increasing average weekly sales per door is strengthening our relationships with these key strategic partners. Target is a great example of how deeper collaboration can unlock additional growth opportunities and create value for both organizations. com.

We believe this expanded relationship reflects the confidence leading retailers have in the strength of our brand and creates additional opportunities to increase sales and expand our fresh delivery network. Much of our progress in fresh delivery has been led by Suk Nicholas, who we recently announced as our Chief Commercial Officer. Her primary focus is to accelerate growth, expand key partnerships, strengthen customer relationships, and build world-class commercial capabilities across markets. Additionally, we continue to stay closely attuned to evolving consumer trends, including the use of GLP-1 and other weight loss medications.

Last quarter I discussed the conclusion from our research, which found Krispy Kreme consumers who use these medications are just as likely as non-users to purchase sweet treats for holidays and special occasions. With our differentiated fresh doughnuts typically purchased two to three times per year, primarily for sharing occasions, we believe Krispy Kreme is well positioned in this context. While we continue to monitor this trend, among other macro factors, we remain focused on expanding the ways consumers experience and share Krispy Kreme, including through our high-performing Minis category featuring Doughnut Minis, Donut Dots, and Mini Crawlers.

This category offers consumers compelling value and greater variety. Overall, we are pleased with the continued progress on our turnaround, extending the momentum that began late last year. S. growth.

With that, Rafael will now review our second quarter financials. Raphael Duvivier, Chief Financial Officer Thank you, Josh. I'm pleased with another quarter of improvements in our financial performance driven by the execution of our turnaround plan. We remain focused on sustainable, profitable growth through quality sales and effective cost management across the P&L.

We continue to delever the balance sheet through increased adjusted EBITDA and increase our profitability by expanding our adjusted EBITDA margin. S. and Japan. Excluding refranchising, we were essentially flat on an organic revenue basis.

6% in constant currency when excluding the impact from McDonald's USA in the prior period. This reflects the strength of the Krispy Kreme brand around the world. 8 million increased 43%, driven by productivity initiatives across our network and cost controls at the corporate level. This represents the fourth consecutive quarter of adjusted EBITDA growth and an acceleration versus our first quarter adjusted EBITDA growth of 38%.

7% through our intense focus on driving sustainable, profitable growth. S. 1%, driven by the strategic closure of underperforming Fresh Delivery doors. S.

4%, driven mostly by growth in digital and our retail shops. In Fresh Delivery, we have taken disciplined actions to improve the productivity of our doors. , now inclusive of both company- and franchise-operated doors, were approximately $697, an increase of 33% year over year. S.

8 million, reflecting continued traction from our turnaround plan, more than offsetting the impact of our refranchising efforts. S. logistics network, savings in SG&A, and eliminating costs related to the now-ended McDonald's USA partnership. Those initiatives drove an adjusted EBITDA margin increase of about 370 basis points to 8%.

K. and Australia, partially offset by growth in Canada. 2 million declined 22% year over year, driven by the refranchising of Japan. 1%, which was 160 basis points lower year over year due mostly to a change in mix from the Japan refranchising.

4%, driven by growth in royalty revenues from the Middle East, Japan, and Brazil. S. and Japan and increased royalty revenue. 3%, driven by higher domestic versus international revenue mix associated with refranchising.

02 of which was due to our refranchising deals. 4 times our trailing four quarters of adjusted EBITDA. 7 times at the end of 2025 and more than 2 turns since last year's second quarter. We are pleased with the progress but continue to focus on reducing our leverage ratio through additional net debt reduction and adjusted EBITDA growth.

Additionally, our free cash flow improved by more than $100 million in the first half of 2026 as compared to the first half of last year, driven by focus on reducing our capital intensity. 1 million decreased 70% versus the first half of 2025. We continue to focus our invested capital on repairs and maintenance of existing infrastructure, which is in line with our asset-light business model and we believe will contribute meaningfully to free cash flow generation during the year. Before providing our guidance update, I wanted to discuss our long-term refranchising philosophy.

We believe our attractive franchise margins advance our capital-light growth strategy. As Josh mentioned, we added three international franchise markets this year, and we are working to add more. We also continue discussions to refranchise additional markets to trusted partners to grow our brand around the world. We believe this will lead to higher margins, reduced CapEx, and generate more free cash flow than owning the markets ourselves.

While some refranchise deals can be dilutive to the income statement, we believe it's important to view them from a discounted cash flow perspective.